Editorial: Think Long plan for California comes up short

2011-11-23 15:09:35

Amid much fanfare, the Think Long Committee for California – a good-government committee backed by a billionaire – just released its "Blueprint to Renew California" after spending a year studying the state's endemic fiscal problems. Its main solution: Revise the tax code and impose $10 billion in tax increases on California's already hard-pressed taxpayers.

It took a year and some of the state's most influential voices to come up with this nonsense?

These so-called corrections for the state's budget, which are likely to be placed in two ballot initiatives on the November 2012 ballot and backed by $20 million in funding from financier Nicolas Berggruen, would include the imposition of a sales tax on services (except for health care and education) and the elimination of most income-tax deductions.

Although the plan would raise taxes on most Californians, it would slightly reduce the corporate tax and sales tax rate. The plan would eliminate the Proposition 98 requirement that more than 40 percent of the budget goes to public schools, but it would increase the annual payment to schools. The group is pushing various infrastructure and budgeting reforms through the legislative process.

Not every specific idea in the plan is bad, but the overall findings are problematic. As San Diego taxpayer activist Richard Rider points out in his recent compilation of statistics regarding California's tax climate, the state has the third-highest income tax in the nation, the highest sales tax rates in the nation, the second-worst business climate in the nation and ranks at or near the top in virtually every bad category.

Yet we're supposed to believe that this mismanaged state can be saved by imposing bigger tax burdens on taxpayers to fund the current bloated system. The committee basically ignores all the big reform issues that would require tough battles with public-sector unions and other special interest groups.

Given how California's Legislature works, it's a real danger to open the doors toward the imposition of new taxes on services. If the group's proposal goes into effect, it would only be a matter of time before the slight tax benefits would be eliminated and increases resume in the sales tax and other levies. This is a blueprint for never-ending tax increases and a worsening of the state's tax burden.

More businesses surely would leave, which would leave the increased revenue predictions in doubt.

The group doesn't wrestle with public-employee pension reform, although it acknowledges the problem in its report. It recognizes that the state has a spending addiction, but offers only slim and toothless proposals to fix it. It calls for limits on the initiative process, which will only empower a free-spending Legislature. It offers some useful oversight and transparency ideas, but the foundation of the plan is a tax increase dressed up as out-of-the-box tax reform.

The committee includes former Assembly Speaker Willie Brown, former Gov. Gray Davis, both Democrats, and a host of other establishment figures. Former Gov. Arnold Schwarzenegger and Gov. Jerry Brown each provided help to the committee.

This is a group of officials who, in many cases, have been at the pinnacle of power and have helped create the current mess. Yet Think Long believes putting together a group of failed politicians – many who have long records advocating for bigger and costlier government – will yield solutions for California's fiscal crisis.